For Italian nationals investing in a US business on an E-2 visa
E-2 Investors From Italy: Tax on the Business, the Investment and You
Investing in a US business from Italy on an E-2? The visa is about immigration, but the tax questions start the day you fund the company: which entity, how the money goes in, and when the US starts taxing you on everything.
Quick answer
Is an E-2 investor from Italy a US tax resident?
Usually yes, once living in the US for most of the year. E-2 is not an exempt-individual category under IRS Pub 519, so your days count under the substantial presence test, and a resident is taxed on worldwide income. If Italy also treats you as resident, Article 4 (Resident) of the treaty breaks the tie. Your company files its own returns: Form 1120, and Form 5472 while it is foreign-owned.
At a glance
- E-2 treaty with Italy
- In force since July 26, 1949 (State Department)
- Company
- US corporation (Form 1120) or LLC; Form 5472 while foreign-owned
- Your tax residence
- Substantial presence test; E-2 days are not excluded
- Treaty tie-breaker
- Article 4 (Resident)
- Social security agreement
- Yes, since November 1, 1978
E-2 from Italy: the basics
Italy is on the State Department list of E-2 treaty countries; the E-2 treaty with Italy entered into force on July 26, 1949 (State Department). USCIS sets out the main conditions (USCIS):
- you must be a national of the treaty country;
- you must have invested, or be actively investing, a substantial amount of capital in a real, operating US enterprise. USCIS does not state a fixed minimum: the amount is judged against the total cost of the business, and the lower the cost, the higher the proportion expected;
- the enterprise may not be marginal, meaning it must have the capacity to earn more than a minimal living for you and your family;
- you must be coming to develop and direct it, shown by at least 50% ownership or operational control.
Immigration questions belong with your immigration lawyer. We handle the tax side: the company, the money you put in, and your own US returns.
Structuring the E-2 business from Italy
The structure you choose in the US decides the filings, not the visa. A corporation files Form 1120 every year (IRS). An LLC follows Treas. Reg. section 301.7701-3: disregarded with one owner, a partnership with more, or a corporation if it elects (IRS). Foreign ownership adds Form 5472 and its US$25,000 penalty (IRS), and a new business set up by someone from Italy generally needs a BE-13 within 45 days (BEA rule).
Funding the business
Before you wire money from Italy, decide whether it is equity or a loan and record it that way. While a foreign person owns the company, loans from the owner and interest paid on them are related-party items for Form 5472 (IRS). Clean records also help with the E-2 file, which your immigration lawyer manages.
Dividends and interest while you live in Italy
Before you move, or in any year you are not a US resident, money the US corporation pays you is taxed by withholding. The statutory rate on US-source dividends and interest paid to a nonresident is 30% unless a treaty lowers it (IRS Pub 515).
| Payment to a resident of Italy | General treaty rate (IRS Table 1) | Treaty citation |
|---|---|---|
| Dividends from a US corporation | 15% | Article 10(2) |
| Interest on a loan you made to the company | 10% | Article 12(2) |
Rates from IRS Tax Treaty Table 1 (Rev. May 2023). The IRS notes the table is not a complete guide to eligibility; the treaty's conditions, including any limitation on benefits, must be met. Once you are a US resident these rates no longer apply to you.
Residence clarity for E-2 investors
| Question | Answer for an E-2 investor from Italy |
|---|---|
| Are E-2 days excluded? | No. E-2 is not an exempt-individual category in IRS Pub 519 |
| When do I become a US tax resident? | When you meet the substantial presence test (31 days this year, 183 weighted days over 3 years), usually in your first full year |
| The first year | Usually dual-status: nonresident before the residency starting date, resident after |
| Resident in both countries? | Article 4 (Resident) of the treaty decides; Form 8833 discloses the position |
| Social security | Agreement in force since November 1, 1978 |
Sources: IRS Pub 519, Form 8833, SSA.
Ongoing US filings for an investor from Italy
- Once you are a US resident you are no longer a foreign person for Form 5472, which the IRS defines as an individual who is not a citizen or resident (IRS). Whether the company still files depends on who else owns it.
- Form 1040 on worldwide income every year you are resident, including income from Italy.
- FBAR and Form 8938 for accounts you keep in Italy; see FBAR and FATCA and Form 8938.
- Form 5471 if you keep control of a company in Italy: a US person controlling more than 50% of a foreign corporation is a Category 4 filer, with a US$10,000 penalty per year for not filing (IRS). See Form 5471.
- Funds held in Italy can be PFICs; see PFIC and Form 8621 for how the rules work.
Treaty and law references
Treaty
- The IRS lists the 1999 income tax treaty. General effective date (IRS Table 3): treaty Jan. 1, 2010 (IRS treaty documents for Italy; treaty text; IRS Table 3).
- Residence and tie-breaker: Article 4 (Resident).
- Article 7 (Business Profits), business profits.
- Article 10 (Dividends), dividends.
- Article 23 (Relief from Double Taxation), relief from double taxation.
US law and E-2 rules
- E-2 status: State Department treaty countries (E-2 with Italy in force since July 26, 1949); USCIS E-2 Treaty Investors, 8 CFR 214.2(e).
- Tax residence: Code section 7701(b) (Pub 519). Treaty residence: Treas. Reg. section 301.7701(b)-7 and Form 8833 (IRS).
- Company filings: Code section 6038A and Treas. Reg. section 1.6038A-1 for Form 5472 (IRS); Treas. Reg. section 301.7701-3 entity classification (IRS); 15 CFR 801.7 BE-13 (eCFR).
- Foreign companies you control: Form 5471 (IRS).
The tax rules of Italy on leaving or keeping assets there also apply; a local adviser covers that side.
How we help
Send us the company documents, the funding records and your travel dates. We confirm when you became a US tax resident, prepare the company and personal returns, and coordinate with your immigration lawyer where the records overlap. Gurleen Kaur, CPA licensed in British Columbia and Washington State, signs.
E-2 investors from other countries
All countries: E-2 investor tax by country. From Canada: E-2 taxation for Canadian founders. Moving without an E-2: moving to the US, by country.
Common questions
What counts as a substantial E-2 investment from Italy?
USCIS does not set a fixed minimum. The investment must be substantial in relation to the total cost of the business, and the lower the cost, the higher the proportion expected. The enterprise may not be marginal. Your immigration lawyer advises on this.
Does an E-2 investor from Italy pay US tax on worldwide income?
Usually yes, once resident. E-2 is not an exempt-individual category, so the substantial presence test applies, and a US resident is taxed on worldwide income from the residency starting date.
What if Italy also treats me as resident?
Article 4 (Resident) of the treaty decides residence for treaty purposes; claiming it on a US return needs Form 8833.
Does the E-2 company file Form 5472?
A US corporation that is 25% or more foreign-owned files Form 5472 with Form 1120, and a single-member LLC files it while its owner is a foreign person. Once you are a US resident you are no longer a foreign person for this purpose.
Sources
Every rule and figure on this page links to the IRS, CRA or other official source it comes from. Amounts change; we re-check them before each engagement.
- U.S. Department of State: Treaty Countries
- USCIS: E-2 Treaty Investors
- IRS: Publication 519
- IRS: Instructions for Form 5472
- IRS: Instructions for Form 1120
- IRS: Instructions for Form 1065
- IRS: Instructions for Form 5471
- eCFR: 15 CFR 801.7 (BE-13)
- IRS: Form 8833
- SSA: U.S. International Social Security Agreements
- IRS: treaty documents for Italy
Gurleen Kaur, CPA licensed in British Columbia and Washington State. Last updated November 11, 2026. This page is general information, not tax or legal advice for your situation.
Related guides: E-2 for Canadian founders, For immigration lawyers, Moving from Italy.
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